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SK Trading International, a unit of South Korea’s largest oil refiner SK Innovation [096770:KS], will purchase up to 200,000 barrels of net-zero oil per year for five years from US oil producer Occidental Petroleum [OXY:US], as reported by Bloomberg on March 22. To achieve net-zero status for its oil production, the US oil manufacturer will construct a new facility that captures carbon dioxide, which will begin operation at the end of 2024. The facility is designed to offset all emissions produced throughout the life cycle of the crude oil from extraction to consumption, making such fossil fuel a net-zero product. The deal will make SK Trading International the world’s first company to buy such net-zero oil.
Global oil manufacturers are increasingly aware of their responsibilities to tackle climate change and have taken various methods including constructing carbon capturing and storage facilities and investing in clean energies, such as similar initiatives by British Petroleum [BP:US]. However, such net-zero oil is much more expensive than conventional oil, as it costs Occidental Petroleum around USD600 to capture a ton of carbon dioxide. As a result, SK Trading International intends to use this luxurious fuel for manufacturing products such as eco-friendly aviation fuel, which will help cut carbon emissions for the hard-to-abate aviation sector. SK Trading International and its parent company have vowed to halve its carbon emissions by 2030 and reach carbon neutrality before 2050.
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